Ed Miliband as Labour leader: how his proposals could affect small business

The big picture

Ed Miliband marks a strident return to old Labour views - taxing the rich harder, moving money away from the private sector, creating social 'equality' rather than the social mobility New Labour strove for. The City is concerned his wealth-strangling measures will make the UK's economy non-competitive: his aims to tax the banks harder and break them up, make the 50p tax rate permanent, introduce the Tobin tax, tax bonuses more heavily and so on. All proposals, of course, which provoke the usual fears about damaging the entrepreneurial culture here as rich investors and top-earning entrepreneurs are deterred from investing or living here.

The shift away from the far more centralised New Labour beliefs is obvious - nowhere more so than in the self-penned mini manifesto on his website and assertions like the one yesterday in his interview with Andrew Marr: "The era of New Labour has passed - a new generation has taken over."

City AM's political editor David Crow sums things up thus: "Gone is the emphasis on social mobility, on reward for hard work and entrepreneurial spirit. It will be replaced by 'equality', essentially old-fashioned redistribution of wealth. Labour no longer wants to grow the pie - it just wants to cut it up more evenly."

'Red Ed' also wants to get the private sector out of public service affairs and to move management of as much as possible back to the government. The City is not alone in its fears about what this could do to the rate of progress in this country. Miliband has also been accused of deficit denial - not having a solid-enough plan to tackle our huge public debt.

Broadly speaking and in line with his return to old Labour core values, Miliband is much more worker-supportive than employer-supportive. Which is great for the average punter, but troubling for businesses. Here are how his proposals, which reflect that heavily, could affect small businesses in the future:

Red tape

Miliband backs more government intervention in private business than we currently have. As a trickle-down effect, the risk of more red tape for small businesses runs high, though no new legislation has been proposed that fully confirms this. We will have to wait for suspicions to be confirmed or dispelled.

The Living Wage

The Living Wage has been an ongoing tenet to Miliband's leadership campaign. Miliband writes on his website: "I am for a living wage over £7 an hour, not just a minimum wage, so people can feel more comfortable that they will get a decent day's wage for a decent day's work." Though he says this will be 'not at the moment as a matter of law, because there will be some small businesses who can't afford it', the worrying tell here is in 'not at the moment'. An increased minimum wage could hit small business owners hard - particularly when it jumps up this far from the current £5.80 position (going up to £5.93 next month).

Fairer Internships

He also backed the campaign for Fairer Internships, which in essence wants interns to be paid as short-term workers.

Although this will affect a far slimmer portion of small businesses than any new red tape, it's still a consideration for those who do make the most of free or cheap labour from grunt-working interns.

Fewer working hours

Miliband says: "I am for greater protection for time outside work so people don't feel compelled to work harder for longer for less. [...] Our economic strategy should change the culture of working time." He hasn't laid out any clear ideas for how to achieve this, but any enforced restrictions on how many hours an employee can work would again be a blow to small businesses who need to squeeze as much work as possible out of staff and for whom any extra regulation creates more admin.


Though rumblings from the unions don't affect most small businesses, it's worth pointing out that many big businesses are worried about the unions being granted extra influence and power, as part of some kind of behind-doors trade-off for their votes for Ed Miliband which swung him to victory. (His brother David gained more votes from MPs and MEPs and party member, and in the previous four voting rounds than Ed - it was only the final 6.53% lead from trade unions and affiliates over David's 13.4% for that voting section that edged Ed to his 0.9% victory.) Particularly after the British Airways debacle, the private sector is particularly on edge about unions' power, and this will only fuel the fire of worry that the business world would be slowed and restricted by an Ed Miliband leadership.

We will be blogging the reactions from business lobby groups later today when they have released their views.



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